Tuesday, May 13, 2008

Avoid descent with decent dissent

Investment Committees Behaving Badly

Jason Zweig, who last year published Your Money And Your Brain, a book on neuro-finance, said there was evidence that dissent was physically painful. “It’s not just psychologically painfully. The discomfort when we dissent comes from the same part of the brain as extreme pain or fear. If one person in the room is being iconoclast, that isn’t just emotionally important for them, it seems to register in the brain. You need to protect people who are dissenting.”

Beyond the secret ballot on decisions, he suggested that even the earlier stages of decision-making needed to be anonymous. Investment ideas should be passed to the chair, anonymously, and the discussion should start from there. “You get a different discussion if people’s opinions aren’t attached to them.”

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